Epigenetic changes caused by DNA methylation, histone modifications, and histone variants play crucial roles in the regulation of chromatin structure and genome stability, developmental specific gene expression, genomic imprinting, and transcriptional silencing of transgenes and other foreign DNA. Cancers and many other diseases are associated with epigenetic alterations. The status of DNA methylation is determined by both methylation and demethylation reactions. DNA methylation by methyltransferase enzymes and the interplay between DNA methylation, non-coding RNAs, and histone modification patterns have been studied extensively. In contrast, the mechanism of active DNA demethylation and its relation with non-coding RNAs and histone modifications are less well understood. Our long-term goal is to understand the dynamic regulation of DNA methylation and its role in development and in responses to the environment. We have developed a unique system in the model organism Arabidopsis thaliana for dissecting active DNA demethylation and RNA-directed DNA methylation (RdDM). In this system, an active transgene (RD29A-LUC) and a homologous endogenous gene become silenced when cellular ROS (repressor of silencing) factors are mutated. ROS1 encodes a 5-methylcytosine-specific DNA glycosylase/lyase that prevents the hypermethylation and silencing of specific loci by initiating a base excision repair pathway for active DNA demethylation. ROS3 encodes a small non-coding RNA-binding protein that regulates active DNA demethylation. We have also discovered several new components of the RdDM pathway using ros1 suppressor mutants, and we have developed a new genetic screen to identify DNA hypermethylation mutants. Our working model is that the RD29A-LUC transgene and some endogenous loci are dynamically regulated by RdDM and active DNA demethylation pathways, and that these marker loci can serve as powerful tools for discovering new components of the DNA methylation and demethylation pathways, i.e., these markers can be used to screen Arabidopsis mutants for altered DNA methylation and expression. This renewal will vigorously test our working model by using the mutant screens and biochemical approaches to discover additional enzymes in the active DNA demethylation pathway and regulatory factors of the pathway. The proposed work will advance new concepts and fill major gaps in our understanding of the dynamic control of DNA methylation, and thus will contribute significantly to elucidating the molecular basis of epigenetic regulation.